Quick Overview of Contract Grid Strategy

I. What is Contract Grid Strategy?

Contract grid strategy is an automated strategy that trades contracts by buying low and selling high within a specific price range. Users only need to set the upper and lower price limits, determine the number of grids to divide, and can start running the strategy. If needed, trigger conditions can be set in advance, and the strategy will automatically start running when market conditions reach the trigger conditions. The strategy will calculate the buy-low and sell-high prices for each small grid, automatically place orders, and continuously buy low and sell high or sell high and buy low with market fluctuations to earn returns from volatility.

Contract Grid Quick Entry

II. Scenarios Where Contract Grid is Applicable

The core of contract grid is "volatility arbitrage," so it is suitable to use contract grid when you expect a long period of sideways market. At the same time, contract grid can also have a certain long/short bias: long grid will only open and close long positions, suitable for sideways upward markets; short grid will only open and close short positions, suitable for sideways downward markets. Neutral grid opens/closes short positions above the market price when the strategy starts, and opens/closes long positions below the market price. Users can choose the appropriate grid type based on their judgment of specific market conditions.

III. Contract Grid Creation Steps, Related Parameters, and Tutorial Examples

3.1 Creation Steps

(1) After entering OKX's PC or app, select "Strategy Trading Mode" in the "Trading" page (top left corner on PC, top right corner on app), then select contract grid.

(2) Enter parameters or use smart parameters in the trading page, then confirm the investment amount to create a grid. (After grid creation, the invested funds will be isolated from the trading account and used independently in the grid strategy)

(3) After creation is complete, you can view and manage grid strategies under "Strategy" at the bottom of the trading page.

(4) During strategy operation, grid profits generated from grid arbitrage will automatically serve as strategy margin. Users can stop the strategy at any time, and all returns will be automatically transferred back to the trading account when the strategy stops.

3.2 Related Terms and Parameters of Grid Strategy

Two Creation Modes:

**Manual Creation: **Set parameters and trigger conditions based on your own judgment of the volatility range. Currently, OKX contract grid strategy supports two trigger types: price trigger and RSI technical indicator trigger. For trigger condition settings, you can view the article 《Introduction to Grid Strategy Trigger Conditions》 for details.

**Smart Creation: **Directly use system-recommended grid strategy parameters. (The logic for recommended parameters is: after backtesting 7 days of market data, combine with intelligent algorithms to recommend parameters suitable for recent market conditions)

Explanation of Parameters When Placing Grid Orders:

Range Lower Price: When the market price is below the range lower price, the strategy will no longer execute order placement operations.

Range Upper Price: When the market price is above the range upper price, the strategy will no longer execute order placement operations.

Grid Number: Grid number represents the number of small order placement intervals divided in the volatility range. For example, range 100-400, arithmetic progression, grid number 3, then it's divided into 3 small intervals: 100-200, 200-300, 300-400.

Leverage: The leverage multiple used for contract trading in the strategy. The currently allowed maximum leverage is 50x.

Invested Margin: The quantity of currency invested in the grid strategy. Among them, maximum available equals the maximum transferable quantity of that currency in the trading account.

Arithmetic Grid: The difference between every two adjacent order prices is equal (e.g., 1, 2, 3, 4).

Geometric Grid: The ratio between every two adjacent order prices is equal (e.g., 1, 2, 4, 8).

Take Profit/Stop Loss Price: When the market price reaches this price level, the strategy automatically stops and closes positions at market price.

Option to Build Position Immediately When Strategy Starts: When the strategy starts, you can choose whether to build positions immediately. For example: if this option is checked for a long grid, long positions will be opened at market price when the strategy starts, and can be closed for profit when prices rise. The same applies to short grids.

Total Amount: Available fund size after using leverage, total amount = invested margin * leverage.

Estimated Long Liquidation Price: Assuming all long orders in the grid are filled, the estimated liquidation price when opening the maximum number of long positions.

Estimated Short Liquidation Price: Assuming all short orders in the grid are filled, the estimated liquidation price when opening the maximum number of short positions.

(Order parameter) Estimated Liquidation Price: The actual estimated liquidation price of currently held positions.

(Order parameter) Actual Leverage: Measures the actual leverage risk of currently held positions, actual leverage = held position value / strategy account equity.

3.3 Tutorial Example (Using BTCUSDT Contract as Example)

Setting Parameters

Grid Type: Long Grid

Range Lower Price: 50,000 USDT

Range Upper Price: 100,000 USDT

Grid Number: 50

Grid Mode: Arithmetic

Leverage: 2x

Investment Amount: 5000 USDT

Open Base Position: Yes

BTC/USDT Price at Strategy Creation: 60,100 USDT

Strategy Operation

First Stage - Initial Orders: The system will calculate each price level of the strategy as 50,000, 51,000, 52,000...98,000, 99,000, 100,000, then place 2x leverage opening buy orders at these prices. If market depth is good, buy orders above market price will be filled to open positions, then place closing sell orders at the next higher level. Therefore, after the strategy starts, orders are placed as follows: opening buy orders at each price level from 50,000-60,000, and closing sell orders at each price level from 62,000-100,000.

Second Stage - Strategy Running: If the market price falls below 60,000, the buy order at that position is filled, and the program automatically places a sell order at the corresponding upper position of this small grid (i.e., 61,000 price level). If the price rises, after the sell order is filled, a buy order is placed at the corresponding lower position.

In this way, continuously placing orders and filling with market fluctuations allows you to continuously earn volatility returns in sideways markets.

IV. Important Notes

4.1 If the current price/indicator already triggers the stop condition when creating the strategy, the strategy creation will fail. You need to adjust current settings and recreate; strategies that have been created but not yet started can be manually started or stopped.

4.2 Regarding modification of trigger condition parameters: Price trigger conditions can have price parameters modified after strategy creation but before triggering; RSI trigger conditions do not allow parameter modification. If you need to adjust parameters, you can stop the strategy and recreate.

4.3 After the market price exceeds the grid's range upper/lower price, the program will no longer continue operations. If the price continues to move unilaterally without returning to the grid range, currently held positions may suffer floating losses or even face liquidation risk. Therefore, it is recommended to set stop loss prices at reasonable positions above and below the grid to stop losses in time.

4.4 After grid creation, invested funds will be isolated from the trading account and used independently in the grid strategy. Therefore, users need to pay attention to the risk that funds being transferred out bring to the overall positions in the trading account.

4.5 If during grid strategy operation, the currency encounters unpredictable abnormal situations such as trading suspension or delisting, the grid strategy will automatically stop.

Disclaimer

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